?Business unusual: The criminalisation of the state?

Article by DA leader Helen Zille March 14 2008

There is a thesis that African states fail because corruption ceases to become an aberration that needs to be rooted out. It becomes institutionalised in the system itself. It becomes business as usual.

In such states, politics has nothing to do with a struggle over ideas or even a struggle between ethnic, racial or religious groups. It is about gaining access to the state and, once there, using it for personal enrichment and ensuring that those who helped put you there are sufficiently enriched to help you stay there. Likewise, race and ethnicity are cynically manipulated to mobilise voters to keep you in power.

It is a process that starts with the centralisation of power in a small ruling clique, who deploy their cronies into all key positions, to entrench and protect their interests. Once in power, they move to colonise the mechanisms intended to hold power to account. Without checks and balances on power, corruption becomes inevitable.

Centralisation, cronyism and corruption soon culminate in the full-blown criminalisation of the state.

This unfolding process is what we are seeing in South Africa today. If we allow it to proceed further, any pretence of being the beacon of moral hope for this continent will be finally dashed.

Recent press reports on the role of the ANC's investment arm Chancellor House point to what some commentators are calling the ?Nigerianisation' of South African politics.

There is an unholy triangle at work, the three corners of which represent business, the state and the ruling party. Connecting these corners are the cadres that the ANC deploys to the state and to business. These cadres ensure that they and their cronies benefit from state tenders as well as Black Economic Empowerment (BEE) deals in the private sector which they help ?facilitate'.

The DA has been exposing the truth about BEE for many years. We have consistently said that the ANC's version of BEE has nothing to do with the much needed empowerment of black South Africans to use the opportunities emerging in a non-racial, open society.

BEE under the ANC has been perverted for the benefit of a small clique in the ruling party and its business partners, who are usually deployed party insiders, and who in turn must pay their dues back to the party and its leaders. This is "legalised corruption", as author Robert Guest famously described the ANC's approach to BEE.

BEE's cover has now been blown wide open by revelations of how the ANC's investment arm, Chancellor House, operates. We have seen that through Chancellor House, the ANC stood to benefit from multi-billion rand tenders awarded by Eskom for the building of new power stations.

This was taxpayers' money that was destined for the ruling party's coffers until Eskom reneged on the deal after it was exposed.

Then, at the weekend, it emerged that R9 million of a R1.5 billion empowerment deal, involving Standard Bank, Liberty Life and asset managers Stanlib, was channelled directly into the ANC's bank account by former ANC MP turned businessman, Saki Macozoma.

These reports follow outgoing ANC Treasurer-General, Mendi Msimang's candid admission at Polokwane that ANC members are being deployed to big business in return for a "levy" paid to the ANC. The heart of the corruption, in terms of Msimang's admission, is that the ANC decides which "cadre" should be deployed to a specific company. Business accepts the deployee, who in turn pays his dues to the ANC.

The ANC's "cadre deployment" policy has led to a collapse of the distinction between the party and the state. Cadre deployment, as described so candidly by Msimang, is now also leading to a collapse of the distinction between the party and business. And the implications will be devastating. No country can remain an open society if business opportunities are increasingly determined by a relationship with the ruling clique of the governing party.

We have come to expect this behaviour from the ANC, but it is astonishing how complicit business appears to be in this institutionalised corruption. More worrying is that many businesses seem to see nothing wrong with such practices. It has become the norm, it is business as usual.

Certain businessmen have indicated to members of my party that representatives of Chancellor House routinely approach them with the offer of facilitating contracts, tenders and other deals on their behalf. The understanding is that the ANC's influence will secure the deal (in both the public and private sector) in exchange for a handsome pay-off to the ANC, through Chancellor House.

While one must be very careful not to generalise about the complicity of business, it has to be said that for every corruptee there is a corruptor. What we are seeing emerge before our eyes is a "generally corrupt" relationship between business, the ANC and the state.

I wonder whether major companies like Standard Bank and Liberty Life (and many, many others) have asked themselves about the damage that these practices inflict on South Africa 's chances of consolidating and sustaining democracy.

Do they realise that these practices are helping South Africa down the fatal path of destruction that begins with centralisation and inevitably proceeds to cronyism, corruption and criminalisation? Do they realise that this will ensure the demise of the Constitution's vision of an open society? Or does much of big business only worry about the contacts that will oil the next big deal? Have they learnt any lessons from South Africa 's tragic past, or from the demise of the democratic vision in countries further north?

Businesses that are party to the downward spiral of cronyism, corruption and criminalisation need to look themselves squarely in the eye. They need to realise that if they continue to play their part in the criminalisation of the state, that one day soon there will not be a viable state left to do business in. Even worse, there will no longer be a viable and open economy within which to do business.

I have no doubt that this is of less concern to members of the ANC. For them it is all about the spoils that being a high-ranking member of the ANC brings. And this is not limited to those at the top. It is happening in every municipality and province where the ANC governs.

As ANC Deputy President Kgalema Motlanthe admitted last year: "This rot is across the board. It is not confined to any level or any area of the country. Almost every project is conceived because it offers opportunities for certain people to make money."

And this is what the struggle for power at Polokwane was really all about. The battle for the soul of the ANC was not predicated on a struggle over policy or leadership style. Any ideological divisions were just a smokescreen for the struggle for personal enrichment.

As Tim Cohen wrote in Business Day this week:

"[At] issue is the creation of a state in which politicians enter politics not with the intention of public service but with the intention of getting rich. The result is that political battles are a kind of proxy for deciding not how social issues are to be addressed but which faction will gain the ability to insert itself into the circulation of money streams."

And this is exactly the rationale behind the ANC's internal inquiry into Chancellor House. Incidentally, it is also the reason for the ANC's internal inquiry into the Arms Deal. It is not to get to the truth or to promote ethics in the ruling party, but an opportunity to smear ANC members who are not aligned to the Zuma camp.

It is clear that those who fall out of the inner circle lose out. For example, Bulelani Ngcuka - husband of the Deputy President - lost out on a R7.5 billion "empowerment" deal with Vodacom, because his business partners deemed him to be now on the "wrong" side of the new ANC leadership.  

Is this why Tokyo Sexwale, not a friend of Mbeki, but not previously close to Zuma either, decided at the last minute to back Zuma in his campaign for the ANC leadership? Is this why Cyril Ramphosa - who is reportedly linked with the Stanlib deal - refused to heed the call to challenge Jacob Zuma for the position of ANC President?

There is little we can do about the motives of those who engage in power struggles to gain access to power. But we can, and must, do something to limit the material rewards that accrue to those who gain high office.

I have written to the Public Protector requesting him to investigate the allegations that have emerged against Chancellor House. He has indicated to me that he will investigate. Being a deployed ANC cadre himself, it remains to be seen how he will undertake this crucial task.

Over the next few months a DA task team will carry out a study of institutionalised corruption and the ways and means to limit its spread. Part of this process will be to review the efficacy of current corruption legislation and to expose the loopholes that allow the ANC to legalise corruption and cover it under a cloak of respectability called BEE.

If South Africa is to succeed, government and business must begin to see these forms of influence peddling, to borrow Thabo Mbeki's clumsy phrase, as ?business unusual.' If they do not, then our democratic project can only fail.

Published in South Africa Today, a weekly letter by the leader of the Democratic Alliance, March 14 2008